On September 26, 1988, the LVMH board met with a plan to elect Henry-Louis Vuitton, Racamier's son-in-law and the great-grandson of the founder, as its head. But Arnault had already accumulated enough shares to take control. And at the meeting, he installed not Vuitton but his own father, Jean Arnault (who was an experienced businessman, says Arnault, and well qualified).

"When I signed the alliance agreement with him in June 1988, I held out my hand. It was like holding a limp rag," Racamier later told Arnault's French biographers, Nadège Forestier and Nazanine Ravai. He shared similar sentiments with De Sole, a friend he had met doing business for Vuitton in New York.

Racamier battled Arnault indefatigably for years afterward, accusing him of multiple counts of financial shenanigans and bad faith. French president François Mitterand even took up the issue of "the LVMH affair" in a televised address. After years of wrangling, French courts found that Lazard had improperly sold some stock to Arnault, but he was exonerated.

Arnault, for his part, accused Racamier and the Vuittons of embezzling from the LVMH's Asian sales (he was cleared) and hired Kroll Associates, the business world's favorite private investigators, to dig into Racamier. False allegations surfaced in the press that Racamier and the Vuitton family had excluded Jews from their store during the war, that Racamier's grandchildren goose-stepped around his backyard, and that he supported the rightist Jean-Marie Le Pen. Racamier blamed Arnault, and a press account accused him of hiring a public-relations firm to fake a letter to from Le Pen to Racamier. The letter turned out to be forged, but no evidence was found to link Arnault to the letter.

Arnault dismisses allegations that his takeover of LVMH disserved its shareholders. "We bought LVMH on the stock market," Arnault says, "and in the meantime, if you take Vuitton, we have tripled the profit and we have tripled the product, so every investor is very happy." The company's stock has doubled in the ten years since his arrival.

Arnault wasted no time shaking up the Paris fashion world. He ran through four top managers at Dior in his first six years there. He set up the young designer Christian Lacroix with his own fashion house, and Lacroix's pouf dresses quickly became nouvelle society's garment of choice in the late eighties. Arnault has bankrolled Lacroix's company to this day, though it's never made a profit.

More typically, Arnault has bought well-known labels -- sometimes riding roughshod over the people who gave them their names. He bought two thirds of the design house Céline, for instance, from its founders, Richard and Céline Vipiana, then forced them out three months later.

When the 68-year-old Count Hubert de Givenchy, famed for dressing Audrey Hepburn, retired from his eponymous label, Arnault passed over his handpicked successor to appoint the young British designer John Galliano, a plumber's son famous for outrageous designs like butt-revealing skirts. A few years later, he moved Galliano to Dior and replaced him with another taboo-breaking young Brit, Alexander McQueen, who told the press, "Hepburn is dead."

Galliano, an Arnault favorite, has lately drawn pans at Dior. The International Herald Tribune's Suzy Menkes described Galliano's recent spring show as "a cartoon African theme" and lamented that Galliano's "magic is fading."

But Arnault defends the choice. "It is my requirement, when I choose a designer, that I feel he is a great talent, and, second, that it is something for which he has a great feeling, aesthetically. Galliano's designs were very feminine, very romantic -- exactly the spirit of what Mr. Dior did in life," he says. He maintains his designers have complete autonomy: "I am involved in the selection of designers, obviously, but then they are free to create."

Michael Kors, the New York designer who took over Céline two years ago and sold a third of his company to Arnault this spring, says input from LVMH has always been welcome. "I have never had anyone at LVMH say, 'Pink is the color for Céline this season,' but I will say, 'Do you think this will work for Southeast Asia?' "

Marcia Kilgore, the 30-year-old founder of Bliss World, who just sold a majority stake in her company to LVMH, says she had heard of Arnault's tough reputation but isn't afraid for her job. "I told him our company was like this chair in the Dior boutique in Paris, covered in Mongolian lamb-hair that looks like wet dog hair -- a wry sense of humor with great backbone. He got it immediately," she says. "I have complete creative control. You don't buy a plane that is flying very well to crash it."